Healthcare providers are under increasing pressure to improve patient satisfaction. However, allocating the necessary resources to achieve these goals means that hospital administrators must seek greater revenue cycle process efficiency through cost cutting strategies and technology investments. Healthcare Document Management (HCDM) solutions are uniquely positioned to deliver key benefits to administrators and clinicians alike.

Hospital administrators and Revenue Cycle Managers are turning to HCDM solutions for process improvements and direct cost savings. HCDM delivers results through the replacement of manual, paper-based processes with more efficient, automated, computer-based processes.

HCDM is comprised of core technologies including document scanning, centralized electronic storage, and workflow automation. Healthcare industry innovators are deploying HCDM systems as organization-wide enterprise solutions, while others choose an iterative, department-by-department, model.

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Latest to join the e-invoicing startups to be funded by Venture Capitalists is TBiConnect run by Simon Fox. Both OB10 and Burns e-Commerce top the VC funding tables for attracting the most cash to date. Among other funded companies include Accountis from North Wales, but they still require a significant funding round to enable an European expansion. For some reason, I do not see Accountis conquering the world similar to OB10, so their best hopes remain within the Europe, capitalising their key customer, DHL. UK companies looking for VC funding include United Data, which is yet to launch its e-invoicing solution. United Data’s Founder and I go back a long way, and I hope Mark Morahan will finally launch his much anticipated e-invoicing hub this year with a realistic business model than the last time (conquer UK before the world!).

I have known Simon Fox of TBiConnect for well over a year, and I am delighted to hear the closing of the first round of £330,000 from regional venture capital fund, South West Ventures. According to GrowthBusinessUK, TBiConnect is an online payment specialist. As far as I know, TBiConnect does not handle payments, let alone on-line payments. Their expertise lies in the exchange of Purchase-to-Payment documents between the sender and the recipient (the buyer and the supplier), and provision of procurement solutions.

TBiConnect has a similar model to Accountis, i.e. enterprise licensed based product. Both companies claim to have the ability to offer a hub based solution. Given that Accountis has been trading for more than five years, and continue to offer licensed based solutions, my advice to TBiConnect is that think strategically when deciding on the license vs. hub based model. Whilst licenses might be financially rewarding today, it may be prudent to set-up a hub now rather than later. Perhaps it is better for me to cover hub vs. licensed model in another post.

According to the story, the fund has committed its maximum initial investment of £330,000. There is also the possibility of raising a further £330,000 from the same fund after six months. South West Ventures has invested £6.9 million in 24 companies (an average of £287,500 per company) with £18.1 million left to invest. The fund is managed by YFM Group, which over the years have become a VC powerhouse operating in many regions of the UK. Doug Stellman of YFM Private Equity recently spoke at the Northern StartUp 2.0 event organised by me at KPMG Manchester.

According to Nick Simmonds, investment manager at YFM Group:

“TBiConnect has developed a proven solution to address the business need problems faced by many organisations handling thousands of financial transactions. We have been particularly impressed with the excellent management team and are delighted to back this exciting solution”.

As part of the funding package, former Amstrad CEO David Rogers has become the Chairman of TBiConnect. According to David Rogers:

“TBiConnect’s customer proposition is compelling. It delivers immediate cost benefits and control to financial systems. We’ve had immediate positive reception and industry recommendations from early customers on the strength of the ease, simplicity and operational benefit they’ve experienced. Investment from the South West Ventures Fund enables TBiConnect to make a forceful entrance for a long-term future in this emerging market.”

According to Simon Fox, CEO of TBiConnect:

“We are delighted to have secured the investment from South West Ventures Fund to support our vigorous growth plans. The business rationale for our service grows ever more powerful as corporates struggle to increase performance in every department, while maintaining stability of operations and IT.”

Just like many other players in the market, TBiConnect is no stranger when targeting the large buyers. TBiConnect targets medium and large organisations that generate over 100,000 transactions a year.

Whilst technologies are available, no UK company has emerged to provide a compelling solution to the SME. Accountis clearly has the technology but lacks a substantial business model to take the market by storm. Version One has early stage of technology, but requires significant development, which somehow I do not see happening under the current ownership structure. If Accountis is serious about the SME, it needs to consider setting up an independent company and provide the software under license to target the SME customer. The current set-up will not work. Why? Their matrices will never allow direct targeting of smaller customers, e.g. revenue per customer will be so low for sales team to get too excited. What this means is that the market is wide open for an innovative startup to penetrate the SME sector by storm. Who will rise to this challenge is not clear. I cannot see OB10 taking a punt at this market, as it’s ambitions are more global. What about Causeway Technologies?

What a pity! A lost opportunity! Anyone interested in exploring this opportunity more closely?

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You have to agree that the mirrors in stores are more flattering than the ones at home. How many times have you purchased something at The Gap or JC Penny, which looked great, only to come home and realize it didn’t quite suit you?  You must be wondering, what this has to do with selecting the right technology partner.

While clothes shopping, you have an option to return the item at the store. Luckily, merchants in the consumer world are very forgiving when it comes to our purchases. Unfortunately, the business world is not quite as flexible. We cannot imagine deploying a technology solution and then just “returning” because it did not deliver on the expected results.

PayStream has developed Seven Steps to help you supercharge your vendor evaluation process and help you select the right provider the first time around so you don’t have to deal with the “returns” conundrum:

Building a Business Case: Is there are return on investment and what is the payback period with each solution? The simplest way to compare multiple options – each of which has diverse cost components – is to use the cost per invoice or cost per payment as the least common denominator.

Documenting your Requirements: Before looking for the right technology provider, thoroughly document your requirements - what processes need to be automated and what functionality is needed for that.

Request for Proposals: Use your requirements document to develop a Request for Proposal (RFP), which typically includes three sections – an outline of requirements, a list of questions around the service providers’ capabilities and a section where they can detail their commercial terms based on the assumptions you have provided.

Customer Reference Interviews: Do not underestimate the value in talking to live clients of the vendors that you are considering. Remember that they were yesterday where you are today and can give good tips and pointers in selecting the vendor as well as making the transition process smoother during implementation.

Vendor Score Cards: Develop a set of quantitative and qualitative metrics on which you want to evaluate the vendors’ relative performance in the RFPs as well as onsite presentations and solution demos. Have a number of stake holders rank the providers and aggregate the results.

Contract Negotiation: There is always room for negotiation in the commercial terms submitted by the providers - fixed costs versus variable fees, gain sharing agreements, guarantees and penalties as well as contract termination costs.

Total Cost of Ownership (TCO): The TCO model takes into account three major costs (i) provider fees, (ii) internal IT resource costs and (iii) change management costs.

Finally, don’t forget to consider switching costs – most of which cannot be quite quantified – when evaluating each option.

Until technology buying becomes more like shopping at the mall, PayStream’s QuickStart Consulting program is here to help clients with the comparing and selection process. QuickStart is like your personal shopper for complex automation decisions.

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I received NAPP’s (National Association of Purchasing & Payables) newsletter the other day. There are always one or two articles that catch my interest, but the one in the current issue really jumped out at me. It was titled “Culture Eats Strategy for Lunch” by Mark Trowbridge (and originally appeared in a different publication). What a fantastic headline!

The article was well done and very supply-chain focused, but it struck me that the topic can just as easily be applied to Accounts Payable — particularly with regard to invoice automation. Invoice automation strategies can be designed with the best of intentions, but if you have a culture resistant to change, your investment in invoice automation will not pay off.

But a resistant culture isn’t the end of the world. It just means you’ll need to put some extra thought and energy into ensuring adoption. I believe there are at least 4 main areas that need to be thoroughly covered when considering an invoice automation deployment:

1. Business strategy and system selection — does the invoice automation strategy support a higher-level corporate strategy (ie. cost containment) and is the chosen invoice automation system the right “fit” without significant customizations?
2. Change management — is there an internal marketing campaign to get stakeholders on board and a value proposition developed that speaks to the personal and organizational benefits of invoice automation? The campaign should start well before a system implementation even begins.
3. Policy and policy enforcement — does organizational policy support adoption of invoice automation (ie. are there approval thresholds based on dollar amounts for non-PO invoices?)? And perhaps more importantly, how is the policy enforced — does it have real “teeth” to deal with policy breaches? It should or it won’t be taken seriously.
4. Leadership — is there active endorsement from an executive who is willing to not only be a project cheerleader but who also can marshal support from other areas of the company, such as IT?Bon appetite, culture!

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First of all, let me wish readership of PaystreamVoices a happy and prosperous 2008.

The European e-invoicing market continues to remain fragmented and small but potential market size remains significantly high. Unfortunately, not much has changed since the early 2000’s except for the increasing number of vendors entering the market place, as reported by Bruno. This is obviously a positive side of a maturing market and has led to minor improvements in the overall market share. However, the optimistic predictions of analysts continued to be missed, year after year. We are still addressing the fundamental problem of replacing paper based solutions with electronic systems. We also seems to have forgotten that our key competitor is none other than paper.

Whilst much has been spoken of supply chain finance, dynamic discounting and the second p (payment) of EIPP, none of these solutions are going to achieve traction until the fundamental problems are ironed out including the significant barriers faced in implementations. This is not to say that the best-in-class companies, as regularly reported by Aberdeen Group, are not enjoying the benefits of e-invoicing. All I am highlighting is that current deployments are a drop in the ocean, when compared to the potential market size, and significant drive from vendors, consultants and governments are needed if this market segment is to be taken seriously. Lack of profits within the service providers continues to dampen the spirit of the enthusiasm.

Niche players such as OB10 has worked tirelessly to promote e-invoicing globally whilst companies such as Ariba has entered the market as part of its product diversification strategy. The scanning and OCR providers, EDI houses and accounts payable specialists all admit that EIPP is the way forward. Many of these companies I have spoken to remain convinced that EIPP is yet to arrive. I do not think they are been ignorant. If a company does not change to satisfy changing market conditions, the survival of the company will be short lived. Their stand is simply based on customer requirements, i.e. none of their customers are asking for EIPP or e-invoicing. So something is missing from the market place. I put this simply down to lack of awareness which can only be addressed by EDUCATION EDUCATION EDUCATION.

Lately, many financial organisations have taken a vested interest in purchase-to-payment or e-invoicing document exchange. Most of the global leading banks are either offering services through partners or currently in discussion with partners to offer these services. At the same time, there are commercial lending organisations such as invoice discounters and factors taking an interest in the segment. This has also created an environment where traditional vendors for the financial sector is taking a closer look at EIPP, e.g. FundTech. Forrester has claimed this is the year for consolidation. No doubt there will be one or two major transactions, but it is more likely 2009 will be the year for consolidation.

What all of above means that the e-invoicing or EIPP market should start to make progress this year. More work is needed to encourage service providers to collaborate with each other. I would like to see much more activity at Hub Alliance and other initiatives this year. The problem with Hub Alliance is that there is no budget to drive the “alliance” forward. In addition, the members’ aspirations are limited by their own personal needs, rather than offering a “alliance” for everyone interested in e-invoicing.

Whilst I remain pessimistic about the market segment, I am hoping that I will be proven wrong this year. I see 2008 not as a year of consolidation but as a year of growth.

I would also like to see more debate taking place at edocr. Please note that you need to first register with edocr before taking part in any of the discussions. Others leveraging edocr include Ariba, Crossgate Group, Accountis, Causeway Technologies, Paystream Advisors, United Data, CashTech (part of FundTech) and ebdex. Why not join the debate today and build edocr into your market communications strategy? It’s all free! Do let me know if anyone is interested in championing special interest groups on “accounts payable automation”, “e-payments”, “supply chain finance”, “banking”, “purchasing cards“, etc.

We all need to speak more about e-invoicing if we are to give this market segement a chance. And part of that is you, as readers to engage in conversation. We need to hear your successes, your horror stories of implementations, and your aspirations for the months ahead. Start engaging today, either here or at my place.

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